PARTA: SHORT QUESTONS NOPARTIAL.CREDIT (30 pts. S pts each). 1. Which of the fol

Question

PARTA: SHORT QUESTONS NOPARTIAL.CREDIT (30 pts. S pts each). 1. Which of the following accounts will be closed by debiting the Income Summary account? A) Depreciation Expense C) Service Revenue B) Accounts Payable D) Accumulated Depreciation 2. The net income of Hendley, Inc. for the year is $35,000. The dividends declared during the year were $43,000. Which of the following statements is true? A) Retained Earnings account decreases by $35,000. B) Retained Earnings account decreases by $8,000 C) Retained Earnings account increases by $43,000. D) Retained Earnings will remain the same. 3 A company purchased inventory for $2,500 from a vendor on account, FOB shipping point, with terms of 2/10, n/30. The company paid the shipper $400 cash for freight in. The company then retumed damaged goods worth $400. The invoice was then paid eight days after the invoice date. Assuming that there was no beginning inventory balance, the cost of inventory would be (Assume a perpetual inventory system.) A) $2,500 B) $2,650 C) $2,258 D) $2,458 An invoice of $800 for merchandise purchased is showing 3/15, n/30 as terms of credit. If the invoice is paid on or before the fifteenth day after the invoice date, the amount to be paid is A) $588 B) $800 C) $776 D) $715 . A company made net sales revenue of $400,000, and cost of goods sold totaled $300,000. Calculate its gross profit percentage A)40% B)25% C)125% D) 33.33% 6. Pantech is a new startup. The beginning balance in the Common Stock account of a company was AED 200,000. The revenues and expenses were AED 200,000 and 150,000, respectively, for the first year. During the year, the company declared and paid dividends of AED 2,000. The ending balance in the Retained Earnings is: AED

Explanation / Answer

Question No.1

Option C. Service Revenue

Question No. 2

Option B. Retained earnings account decrease by $8,000

Question No 3

Option :D. $2,458

Purchases - purchase returns - purchase discounts + freight in

$2,500 - $400 - (2,100*2%)+ $400

Question No 4

Option :C. $776

$800 - (800*0.03) =$776

Question No 5

Option B.25%

Gross profit ratio = (sales - cost of goods sold) /Sales

= (400,000 - 300,000) /400,000

=0.25 or 25%

Question No.6

Answer : AED 48,000

Revenues - expenses = net income

AED 200,000 - AED 150,000 = AED 50,000

Ending balance in retained earnings =net income - dividends

= AED 50,000 - AED 2,000 = AED 48,000

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